business_v_hobby - 900 Home mortgage interest 10,000 Home...

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Topic: Business vs. hobby deductions Jim, the vice president of an oil company, has AGI of $80,000 (before considering the following information). He decides to pursue painting in his spare time. He uses his home as a studio, comprising 10% of the home’s square footage. During the year, Jim incurs the following expenses: Frames 350 Art supplies 300 Fees paid to models 1,000 Expense related to his home Property taxes
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Unformatted text preview: 900 Home mortgage interest 10,000 Home maintenance & utilities 3,600 Depreciation on 10% of home used as studio 500 During the year, Jim sold paintings for a total of $3,200. Required : [1] Describe the tax consequences if the activity is held to be a hobby. [2] Describe the tax consequences if the activity is held to be a business (unlikely in this case, but just for illustrative purposes)....
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